Executive Solutions

Solutions for Corporate Executives

Executives at publicly traded companies face many unique challenges when managing
their personal financial plans. The individuals are often so consumed by the demands
of their occupations that they are unable to dedicate the necessary focus to their
personal financial situations.

Our team specializes in providing consulting services to successful corporate executives
on a variety of issues that are unique to their situations.

Concentrated Stock Positions

Executives may own large concentrations in their employer's stock. This concentration
can come in the form of shares of stock, options, restricted stock, SARs and shares
in qualified plans. Executives also need to consider their reliance on the company
for non-stock-related factors including cash compensation, healthcare benefits and
retirement packages. If something were to happen to an executive's employer that
severely impacted its ability to perform over the longrun, it could have a devastating
effect on the executive's personal financial situation.

There are a variety of solutions available to address a concentration in a single
stock. Every client's situation is unique, so our team works to first identify the
client's objectives. After understanding the company's trading policy, we offer
recommendations of any possible strategies that can accomplish the client's goals.

Techniques that may be of interest to executives with a concentration include:

Equity-Based Compensation

In addition to cash compensation executives are often compensated through stock
ownership. This can come in several forms, including stock options, restricted stock,
and stock appreciation rights (SARs).

Stock Options

Stock options offer executives the ability to purchase company shares at a predetermined
strike price no later than a defined expiration date. They typically have vesting
periods that prohibit exercise prior to a specific date. Stock options come in two
forms: non-qualified and incentive.

Non-qualified stock options are taxable as compensation to an executive upon exercise.
Incentive stock options can offer favorable tax treatment if certain conditions
are met. However, they also create alternative minimum tax implications for some
individuals.

There are many factors that go into stock option planning. Our team focuses on a
comprehensive approach that analyzes the relative valuation of each option grant,
the tax ramifications of an exercise and the client's overall exposure to the company.
Additionally, catalysts such as an approaching expiration or unexpected liquidity
need can also warrant exercise. If a decision is reached to exercise, our team can
also assist in evaluating methods to pay for the exercise (i.e., cash payment vs.
cashless alternatives).

Restricted Stock / SARs

Companies can compensate employees by granting restricted stock. These shares have
vesting schedules which prohibit the sale of the stock until the vesting date. Upon
vesting, the shares are taxed as compensation at the prevailing market price. The
executive must pay for the tax withholding, including federal, state and any applicable
local taxes, either through cash or a sale of some of the restricted shares (cashless
exercise).

Companies can also issue stock appreciation rights, which act like restricted stock,
but are often settled in cash instead of shares. These provide the employee with
the same economic benefit as restricted stock, without the company actually issuing
shares. This can also be referred to as a phantom stock plan.

Our team is available to help plan for future restricted stock vesting dates and
to analyze the possibility of making an 83(b) election within the first 30 days
of receiving a new grant. This technique can be useful for executives expecting
significant price appreciation in their company's stock. Electing 83(b) requires
the employee to pay taxes upon grant of the restricted stock and converts any appreciation
between the grant date and vesting date into a capital gain.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

Regulatory Requirements / Forms Filing

Senior executives considered "control persons" at publicly traded companies must
navigate the various regulatory requirements impacting transactions in company stock.

Rule 144

This rule, part of the Securities Act of 1933, pertains to unregistered shares of
stock or shares owned by control persons. The regulation establishes parameters
governing the sale of company shares by these individuals, including volume limitations
on the number of shares that can be sold in a three-month period and the requirement
to file Form 144 with the SEC.

Section 16

Section 16 of the Securities Exchange Act of 1934 also applies to affiliates of
publicly traded companies. This regulation requires certain filing forms (most commonly
Form 4), measures for short-swing profits and prohibits the short selling of company
shares by insiders.

Our team works with executives to ensure adequate and timely filing of all necessary
regulatory forms.

Company Trading Policies

Each public company has a policy governing employees' activities related to company
stock. These policies may include required minimum ownership levels as well as define
open trading windows and blackout periods for executives.

Our team assists executives in understanding and addressing company policies as
part of the broader consultation work we provide. Using a 10b5-1 plan can be an
effective way to affect a plan that targets an executive's goals while adhering
to corporate policy.

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